Consultant Corner: Does Requiring Prior Authorization from Contracted Providers Benefit or Burden Medicare Advantage (MA) plans?

Providers, Industry Groups and the Office of Inspector General (OIG) have been very vocal about concerns for prior authorization requirements creating barriers that may delay or prevent Medicare Advantage enrollees’ timely access to needed, affordable care. In response, the Centers for Medicare and Medicaid Services (CMS) has proposed rule CMS–4201–P, which seeks to codify clarifications and new requirements regarding the use of clinical coverage criteria and prior authorization (PA) procedures, amongst other requirements.

PA procedures are a burden for MA plans. MA plans must develop and regularly review the criteria, at least annually as proposed in the rule, administer the clinical review, and monitor for consistency of application of the criteria. In another December proposed rule, CMS-0057-P,  CMS proposed codifying requiring prior authorization decisions no later than seven days after receiving a standard request.  Note, the current requirement for MA plans is 14 days. MA plans should welcome the opportunity to move away from PA requirements for plan covered services performed by contracted providers. The contracted provider is responsible for knowing whether specific items or services are covered under the plan and, when in doubt, can voluntarily request a pre-service organization determination.

Prior authorization does not change the medical necessity or documentation requirements, it just occurs prior to the service being provided. MA plans can conduct a medical necessity review at the time the claim is filed, as needed. This would presumably be limited to those claims that do not appear to meet medical necessity as billed, for items or services that are high-cost/low-value services, or items or services that have a high variation in utilization. MA Plans may want to limit PA requirements to new and emerging therapies to ensure effectiveness and/or safety. CMS prohibits the enrollee from being held financially liable for a contracted provider’s failure to follow plan rules, which includes meeting medical necessity requirements. If a contracted provider furnishes a covered service that is not medically necessary and the enrollee did not reasonably know the service would not be covered in advance of the service being provided, the enrollee is only responsible for applicable cost share and the remainder of liability can be assigned to the provider for not following plan rules.